The University and College Union has called on post-92 universities to ensure staff can stay in the Teachers' Pension Scheme now employer contributions are set to fall, after several had tried to restrict access. The Universities and Colleges Employers Association has called on the government to provide a new long-term solution for modern universities.  

Employer contribution rates to the Teachers’ Pension Scheme will fall to 17.68% from next April, from currently 28.68%. TPS employer contributions, like those of other public sector schemes, are determined by the 'superannuation contributions adjusted for past experience' discount rate. As this rate is derived from assumed GDP growth, it can vary significantly, pushing up TPS contributions significantly over previous valuation cycles. 

However, last month the government confirmed the rate for the 2024 valuation would be CPI+2%, leading to a large reduction, not far above the 16.48% last seen in mid-2019.

The high employer cost of TPS has led several post-92 universities to curtail access to the scheme they are obliged to offer, by employing people through subsidiary companies instead. One of them, Sheffield Hallam, has already agreed to rethink its plans in light of the changed Scape rate.

UCU is now calling on other post-92 universities to follow suit. UCU general secretary Jo Grady said: “University staff rightly expect vice-chancellors to act with integrity, comply with their legal duties, and use the newfound savings to protect pensions. We are now calling on every post-92 institution to confirm they will safeguard TPS access, and for all those that have begun attempting to stop members joining the scheme, to look to Hallam and change course to avoid any future disruption on campus.” 

The institutions creating subcos to limit TPS contributions include the universities of Staffordshire, Southampton Solent, Coventry, Winchester and Chichester, as well as Northumbria and London South Bank among others.  

Employer body UCEA welcomed the reduced rate but said the higher education sector “needs flexibility and certainty”. 

“This reduction will provide welcome short-term financial relief for our member institutions that have a statutory obligation to offer the TPS. However, the magnitude of the reduction simply highlights the inherent volatility in TPS, one of the key challenges institutions face when setting and delivering their business plans,” said chief executive Raj Jethwa.  

UCEA expects the valuation to reduce TPS costs for universities in England and Wales by about £900m by 2030. However, Jethwa said that figure was “modest” compared with the cost of government decisions. UCEA claims that factoring in tuition fee rises, government policy has added around £3.7bn of costs to the sector, alongside funding cuts. The employers cite tax increases, the international student fee levy and loss of income from recent immigration policies.  
 
UCEA is now calling on the government to “address the underlying structural inequalities and create a level playing field for post-92 institutions”, one of its complaints being that traditional universities enjoy lower contributions to the Universities Superannuation Scheme. 

“The sector now needs the government to act and deliver a sustainable, long-term solution that recognises institutions’ autonomy and supports financial stability,” said Jethwa.